Modelling stokes bubble debate once again

The debate of the future of Australia’s house prices has been reignited thanks to economic modelling from three academics.

Abbas Valadkhani of Swinburne University, Ronald Ratti from the University of Western Sydney and Greg Costello from Curtin University analysed monthly house data from 1995 to the end of 2014 and used their results to extrapolate what they think house prices in Australia will do over the next 12 months.

According to their research, next 12 months will see Melbourne’s houses hit with a 9.2% decrease, while Sydney houses prices will rise by 6% to the end of the 2015 before plateauing.

The analysis predicts prices in Brisbane will fall by 8.1% over the next year, while Perth will see a fall of 5.2%.

Prices in Adelaide, Hobart and Canberra will continue to climb at a slow rate.

While Dr Valadkhani told Fairfax media outlets that the trio’s modelling was predicting the general directions that prices would follow, a number of economists believe their predictions are off-base.

Domain Group senior economist Dr Andrew Wilson told the Sydney Morning Herald there is no historical data that points to the decline the trio have predicted for Melbourne.

“If Melbourne falls at the level predicted it would be unprecedented in the modern era," Dr Wilson said.

"There is clearly no case for a historical sharp decline – Melbourne house prices are still 50 per cent lower than Sydney with incomes at similar levels.”

So if this guy states that "interest rates" is all the factors for a house price decline...... then sadly I think property fools forget the rest of the world...... e.g. When China is forced to declare that its growth is less than 6%, and continuing to decline, watch what the rest of the world does, especially given that the Euro could break up by the end of the year as well....... when we dip into another world slow down, you watch the panic in Australia by the fools that overpaid for property..... cant negative gear with no job or a lower wage!!

Glenn says on
15/07/2015 07:28:33 PM

What a Negative Nancy. I guess he doesn't own property.

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